CG Power and Industrial Solutions Limited · 2020. 10. 28. · CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai

CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7777 F: +91 22 2423 7733 W: www.cgglobal.com Corporate Identity Number: L99999MH1937PLC002641

Our Ref: COSEC/129/2020-21

Smart solutions. Strong relationships,

October 28, 2020

By portal

The Corporate Relationship Department BSE Limited

1 st Floor, New Trading Ring

Rotunda Building,

The Assistant Manager - Listing National Stock Exchange of India Ltd.

Exchange Plaza, Bandra-Kurla Complex,

Sandra (East),

Phiroze Jeejeebhoy Towers,

Dalal Street, Mumbai 400 001

Scrip Code : 500093

Dear Sir/Madam,

Mumbai 400 051

Scrip Id : CGPOWER

Sub: Outcome of Meeting of the Board of Directors Ref: Intimation dated October 22, 2020 for schedule of Board Meeting

In furtherance to our captioned letter, we wish to inform you that the Board of Directors of the

Company, at their meeting held on October 28, 2020, have inter-a/ia considered and

approved the Unaudited Financial Results, Segment-Wise Financial Report and Statement

of Assets and Liabilities of the Company, both on standalone as well as consolidated basis,

for the 2nd quarter and half year ended September 30, 2020 ("Financial Results") as

recommended by the Audit Committee of the Company.

A copy of the Financial Results along with the Limited Review Report signed by Statutory

Auditors, Mis. S R B C & CO LLP, Chartered Accountants, on the Financial Results is

enclosed herewith for your information and records.

The meeting of the Board of Directors commenced at 04:30 p.m. (1ST) and concluded at

08:44 p.m. (1ST).

We would appreciate if you could take the same on record.

Thanking you

Yours faithfully,

For CG Power and Industrial Solutions Limited {1�11slria1 s

7 /�'..: �%�%.,_ o

C, §"

Alen Ferns ;* t)

_/ Company Secretary an� •• ,.,n1 .. ,ance Officer

Encl: As above

12th Floor, The Ruby 29 Senapati Bapat Marg Dadar (West) Mumbai - 400 028, India

Tel: +91 22 6819 8000

Chartered Accountants

S R B C & CO LLP, a Limited Liability Partnership with LLP Identity No. AAB-4318Regd. Office : 22, Camac Street, Block ‘B’, 3rd Floor, Kolkata-700 016

Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited Standalone Financial Results of CG Power and Industrial Solutions Limited (the ‘Company’) Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

Review Report to The Board of Directors CG Power and Industrial Solutions Limited

1. We were engaged to review the accompanying statement of unaudited standalone financialresults of CG Power and Industrial Solutions Limited (the ‘Company’) for the quarter endedSeptember 30, 2020 and year to date from April 01, 2020 to September 30, 2020 (‘theUnaudited Standalone Financial Results’) attached herewith, being submitted by the Companypursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations, 2015, as amended (the “Listing Regulations”).

2. The Unaudited Standalone Financial Results is the responsibility of the Company’s Managementand is approved by the Company’s Board of Directors. As explained in the Basis of preparation,these Unaudited Standalone Financial Results, have not been prepared in accordance with therecognition and measurement principles laid down in Indian Accounting Standard 34, (Ind AS34) “Interim Financial Reporting” prescribed under Section 133 of the Companies Act, 2013,as amended, read with relevant rules issued thereunder and other accounting principlesgenerally accepted in India. Our responsibility is to express a conclusion on these UnauditedStandalone Financial Results based on our review. Because of the matters described inparagraph 4 below, we were not able to obtain sufficient appropriate audit evidence to providea basis for conclusion on these Unaudited Standalone Financial Results and hence we do notexpress a conclusion on these Unaudited Standalone Financial Results.

3. We conducted our review of the Unaudited Standalone Financial Results in accordance with theStandard on Review Engagements (SRE) 2410, “Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity” issued by the Institute of CharteredAccountants of India. This standard requires that we plan and perform the review to obtainmoderate assurance as to whether the Unaudited Standalone Financial Results is free ofmaterial misstatement. A review of interim financial information consists of making inquiries,primarily of persons responsible for financial and accounting matters, and applying analyticaland other review procedures. A review is substantially less in scope than an audit conducted inaccordance with Standards on Auditing and consequently does not enable us to obtainassurance that we would become aware of all significant matters that might be identified in anaudit. Accordingly, we do not express an audit opinion.

4. Basis for Disclaimer of Conclusion

As explained in the note 2 and note 3 of the Unaudited Standalone Financial Results, theNational Company Law Tribunal (NCLT) has passed an order allowing the Ministry of CorporateAffairs (MCA) to reopen and recast the books of accounts and the financial statements of theCompany and its subsidiaries (‘Proposed Revision’) under Section 130 of the Companies Act2013. As stated in note 1 and note 2, the Board of Directors of the Company, taking intoconsideration the basis of preparation and significance of matters described in notes to the


CG Power and Industrial Solutions Limited Page 2 of 5

Unaudited Standalone Financial Results in relation to the past transactions, believes that the accompanying Unaudited Standalone Financial Results have been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34, (Ind AS 34) “Interim Financial Reporting” except for matters detailed in notes to the Unaudited Standalone Financial Results; believes that the accompanying Unaudited standalone financial results may not disclose all the effects and all the information required to be disclosed in terms of the Listing Regulations, including the manner in which it is to be disclosed, and that the accompanying Unaudited Standalone Financial Results may contain material misstatements.

We are unable to determine the consequential impact of the aforesaid Proposed Revision and the impact of matters stated in our audit report for the year ended March 31, 2020 on the opening balances and the impact of certain specific transactions / matters and disclosures on these Unaudited Standalone Financial Results. Such specific transactions / matters include:

i. We draw attention to note 9 of the Unaudited Standalone Financial Results. There arecertain outstanding identified receivables and identified liabilities as at March 31, 2020aggregating Rs. 2,358.11 crores and Rs. 320 crores respectively, which as explained tous, were dues from / dues to promoter affiliate companies, connected parties, and asubsidiary, and the transactions that resulted in such identified receivables and identifiedliabilities were approved by erstwhile Certain Identified Personnel (CIP).

As stated in note 3(f) of the Standalone Financial Results, the Company has filed a suit forrecovery against identified promoter affiliate company, former Directors connected withthe promoter group and former KMPs, for recovery of Rs. 1,416.07 crores (includingamount of Rs. 689 crores towards damages).

As of the date of this report, the Board of Directors had initiated an investigation into theaforesaid matters; are still awaiting investigations to be concluded and; yet to identify abasis to conclude whether the identified receivables are recoverable and identifiedliabilities are payable. Accordingly, we are unable to quantify the adjustments to theUnaudited Standalone Financial Results in relation to such outstanding identifiedreceivables and identified liabilities.

ii. We draw attention to note 6 and note 7 of the Unaudited Standalone Financial Results,which describes that the Company has not made any provision towards the corporateguarantees provided to certain overseas entities amounting to Rs. 913.77 crores (including Rs. 799.73 crores against which guarantee invocation / demand letter is received by theCompany).

Pending outcome of bankruptcy / liquidation proceedings of such oversees entities, we areunable to obtain sufficient appropriate audit evidence in respect of potential impact of anyunforeseen liabilities post liquidation, outcome of such invocation/demand letter andobligation towards corporate guarantees extended to these subsidiaries and itsconsequential impact on the Unaudited Standalone Financial Results.

iii. We draw your attention to note 16 of the Unaudited Standalone Financial Results, whichdescribes that the Company has made a provision amounting to Rs. 20.81 crores towardsthe sales tax liability on outstanding ‘C’ Form pending to be submitted to the sales taxauthorities, as at September 30, 2020. It is further stated that the Company has not



provided for the interest liability aggregating to Rs. 21.35 crores, basis management estimate that there will be no possible cash outflow in this regard. However, management has received demand notices in relation to such interest liabilities.

In the light of inadequate basis for not providing the interest liability towards outstanding ‘C’ forms pending to be submitted, we are unable to obtain sufficient basis to comment on completeness of related provision and consequential impact on the Unaudited Standalone Financial Results.

iv. We draw attention to note 20 to the Unaudited Standalone Financial Results whichdescribes that the Board of Directors have instructed the management to undertake adetailed investigation in relation to the matters of possible non-compliance with variousprovisions of the Companies Act, 2013, the Income Tax 1961, the Foreign ExchangeManagement Act 1999, SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015 (as amended), Prevention of Money Laundering Act and otherregulations, as applicable to the Company (Applicable Laws). The Company is in process ofinvestigation and evaluation of implication of potential non compliances of Applicable Laws.

Further, as stated in note 3 (a), 3(b), 3(c), 3(d) and note 3(e) of the Unaudited StandaloneFinancial Results, there are investigations and enquiries been conducted, for reasonsexplained in the notes to the Unaudited Standalone Financial Results, by Securities andExchange Board of India, Serious Fraud Investigation Office and Enforcement Directorate.Further, Department of Income Tax has also issued notices and is seeking explanations bythe Company. The Company is engaging and providing details and responses to all suchinvestigations, enquiries and demands, as raised on the Company.

Pending outcome of the investigation initiated by the Company and conducted on theCompany by regulators and management assessment thereon, we are unable to determinethe potential impact of non - compliances with Applicable Laws and determine any furtheradjustment that may be necessary to these Unaudited Standalone Financial Results.

v. We draw your attention to note 3(d), 3(i), 3(j), 3(k), 11 and note 17 of the UnauditedStandalone Financial Results which describes that identified litigations and contingenciesare pending to be evaluated by the management and the management has not ascertainedthe legal position of the Company, the possible cash outflow and consequential impact onthese Unaudited Standalone Financial Results.

Pending management evaluation of legal positions and possible cash outflows, we areunable to obtain sufficient appropriate evidence with respect to completeness of litigationand contingencies and consequential impact on these Unaudited Standalone FinancialResults.

vi. We draw your attention to note 3(c) of the Unaudited Standalone Financial Results whereinit is stated that the Company has received a copy of forensic report on September 04, 2020 pursuant to an investigation by a forensic auditor appointed by BSE as mandated by SEBI.As stated in note 3(c), the Company is providing information to SEBI in respect of theinvestigation.



Pending resolution of matters stated in such forensic report, we are unable to comment on any possible implications arising therefrom.

vii. Going Concern Assessment

We draw attention to note 15 of the Unaudited Standalone Financial Results which indicatethat (a) the Company has incurred net losses in the previous years and during the currentquarter and six months period ended September 30, 2020; (b) the Company's currentliabilities exceeded its current assets as at September 30, 2020 by Rs. 3,299.80 crores; (c)as given in note 5 of the Unaudited Standalone Financial Results the Company and lendershave approved binding offer made by primary bidder and entered into a SecuritiesSubscription Agreement for infusing of capital amounting to Rs. 800 crores, which is subjectto pending approvals, further basis expected settlement as per the resolution plan theCompany has classified borrowings balances as current liabilities. However, consideringthat as per the terms of settlement and share subscription agreement, the investor will betaking over operations on issuance of shares and warrants, the current management is notin a position to provide cash flow assessment for the period of next 12 months.

Pending the outcome of the matters described in the paragraphs (i) to (vi) above, and thematters disclosed in paragraph vii(a) to vii(c) above and possible impact thereof and takinginto consideration the inability of the existing management of the Company to provide thecash flow statement for a period of next 12 months, we are unable to obtain sufficientappropriate evidence to comment on Company’s ability to continue as Going Concern.

5. Disclaimer of Conclusion

Because of the significance of the matters described in paragraphs 4 above, taking intoconsideration the ongoing management investigation into various matters, pending assessment of legal compliances by the Company; ongoing regulatory reviews / actions and counter claimsreceived by the Company; possible impact where-of has not been quantified by themanagement; and certain provisions accounted by the Company during the quarter and sixmonths ended September 30, 2020; we have not been able to obtain sufficient appropriateevidence to provide a basis for our conclusion as to whether the accompanying UnauditedStandalone Financial Results:

i. are prepared in accordance with the recognition and measurement principles laiddown in Indian Accounting Standard 34, (Ind AS 34) “Interim Financial Reporting”specified under Section 133 of the Companies Act, 2013 and;

ii. disclose the information required to be disclosed in terms of the Listing Regulationsincluding the manner in which it is to be disclosed or that it contains materialmisstatements.

Other Matters

6. In relation to certain identified transactions before March 31, 2019 and balances as at March31, 2019, we had issued a letter under section 143(12) of the Companies Act, 2013 to theCompany seeking investigation and outcome. Based on the interim response received from theBoard of Directors of the Company, we filed our preliminary response to the Central



Government reporting the suspected fraudulent transactions and balances. Management investigation are not yet concluded.

7. The comparative Ind AS financial information for the quarter ended June 30, 2020, quarter and period ended September 30, 2019 and for the year ended March 31, 2020 are included in these Unaudited Standalone Financial Results, on which we have issued a disclaimer of conclusiondated September 08, 2020, January 28, 2020 and disclaimer of opinion dated June 27, 2020,respectively.

For S R B C & CO LLP Chartered Accountants ICAI Firm registration number: 324982E/E300003

per Shyamsundar Pachisia Partner Membership No.: 49237

UDIN: 20049237AAAACO6029 Place: Mumbai Date: October 28, 2020

Digitally signed by SHYAMSUNDARR PACHISIADN: cn=SHYAMSUNDAR RPACHISIA, c=IN, o=Personal,[email protected]: 2020.10.28 20:18:37 +05'30'

SHYAMSUNDARR PACHISIA

Sr. No.

1

2

3 4 5 6

7 8 9 10 11 12

13 14

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CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cggtobal.com E: [email protected] Corporate Identity Number (CIN): L99999MH1937PLC002641

c; Smart solutions

Strong relationships.

STATEMENT OF STANDALONE FINANCIAL RES UL TS FOR THE QUARTER ANO SIX MONTHS ENDED 30TH SEPTEMBER, 2020

Cl' In c.rorel Particulars Previous

Quarter ended Six months ended vear ended 30.09.2020 30.06.2020 30.09.2019 30.09.2020 30.09.2019 31.03.2020 Unaudited Unaudited Unaudited Unaudited Unaudited Audited

Income (a) Revenue from operations 564.80 235.69 957.36 800.49 2145.95 3169.48 'b) Other income 7.77 9,59 19.76 17.36 39.73 56.88 Total Income 572.57 245.28 977.12 817.85 2185.68 3226.36 Expenses (a) Cost of materials consumed 400.02 141.27 573.97 541.29 1392.80 1947.34 (b} Purchases of stock-in-trade 14.55 5.93 26.15 20.48 45.00 60.92 (c) Changes in inventories of finished goods,

work-in-progress and stock-in-trade (43.30) 23.94 65.36 (19.36) 39.99 171.29 (d) Employee benefits expense 64.40 64.38 85.90 128.78 172.70 322.93 (e) Finance costs 70.87 64.61 71.00 135.48 141.84 281.78 (f) Depreciation and amortisation expense 20.60 21.00 20.50 41.60 46.37 90.54 (g) Foreign exchange (gain)/ loss (net) (2.60) 1.59 13.00 (1.01) 7.89 25.81

(h) Other expenses 87.91 59.71 118.12 147.62 320.52 537.80 Total Exoenses 612.45 382.43 974.00 994.88 2167.11 3438.41 Profit/ llossl before exceotional items and tax (39.88) (137.151 3.12 1177.031 18.57 1212.05) Exceptional items (net) (88.64 (272.54 (1522.59' (361.18) (1522.59' (1697.77 Loss before tax 1128.521 (409.69' (1519.47) (538.21} 11504.02) 11909.82 Tax expense: Current tax - - - . . . Deferred tax 6.38 12.06 (7.93 18.44 (15.86 (110.62 Loss from continuing operations after tax (134.90 (421.75 (1511.54 (556.65) (1488.16) (1799.20 Profit/ (loss) from discontinued operations before tax . . . . . . Tax expense on discontinued operations . . - . - -Profit/ (loss) from discontinued operations after tax . . . . . . Net loss 1134.90\ 1421.751 11511.54' 1556.65' 11488.16' 11799.20\ Other comprehensive income: (i) Items that will not be reclassified to profit or loss (0.04) (0.03) (0.95) (0.07) (1.89) (0.13) (ii) Income tax relating to items that will not be reclassified to profit or loss 0.01 0.01 0.33 0.02 0.66 0.05 Total comprehensive income after tax 1134.931 1421.771 11512.16} 1556.701 11489.39' (1799.28} Paid-up equity share capital 125.35 125.35 125.35 125.35 125.35 125.35 (Face value of t 2 each)

Reserves excludino Revaluation Reserve 588.54 Earnings Per Share (for continuing operations) (not annualised) (a) Basic (2.15) (6.73) (24.11) (8.88) (23.74) (28.71) 'bl Diluted (2.15) (6.73} (24.11} (8.88) (23.74) (28.71) Earnings Per Share (for discontinued operations) (not annualised)

(a) Basic . . .

'b) Diluted . . . . .

Earnings Per Share (for continuing operations anddiscontinued operations) (not annualised)

(a) Basic (2.15) (6.73) (24.11) (8.88) (23.74) (28.71) 1b) Diluted (2.15) (6.73} (24.11) (8.88) (23.74) (28.71)

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CG Power and Industrial Solutions Limited Registered Office, CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F, +9122 2423 7733 W, www.cgglobal.com E: [email protected] Corporate Identity Number {CIN): L99999MH 1937PLC002641

Smart solutions. Strong relationships.

STANDALONE SEGMENT-WISE REVENUE, RESULTS, ASSETS AND LIABILITIES

Sr. Particulars No.

1. Segment Revenue:

(a) Power Systems

'b) Industrial SvstemsTotalLess: lnter-Seqment RevenueTotal income from operations

2. Segment Results:

Profit/ (loss) before tax and finance

costs from each segment

(a) Power Systems

(b) Industrial SystemsTotalLess:

(i) Finance costs

(ii) Other un-allocable expenditurenet of un-allocable income

(iii) Foreign exchange (gain) / loss (net)

Add:

(i) Exceptional items (net)Loss from ordinary activities before tax

3. Segment Assets:

(a) Power Systems

(b) Industrial Systems

(c) Unallocable

(d) Discontinued OperationsTotal segment assets

4. Segment Liabilities:

(a) Power Systems

(b) Industrial Systems

( c) Unallocable

(d) Discontinued OperationsTotal segment liabilities

(' in crore)

Quarter ended Six months ended Previous

year ended

30.09.2020 30.06.2020 30.09.2019 30.09.2020 30.09.2019 31.03.2020

Unaudited Unaudited Unaudited Unaudited Unaudited Audited

160.88

404.05 564.93

0.13 564.80

88.00

147.69 235.69

235.69

(21.35) (46.90)

63.71 (14.19' 42.36 (61.09)

70.87

13.97

(2.60)

(88.641

(128.52)

797.43

622.88

3002.37

279.85 4702.53

879.64

813.52

2852.18

4545.34

64.61

9.86

1.59

(272.541

(409.69)

797.13

553.85

3018.91

279.85 4649.74

835.38

777.74

2744.50

4357.62

328.80

628.61 957.41

0.05 957.36

8.39

91.87 100.26

71.00

13.14

13.00

(1522.59) (1519.47)

1211.43

877.47

3014.78

279.94 5383.62

957.32

962.62

2439.90

4359.84

248.88

551.74 800.62

0.13 800.49

(68.25)

49.52 (18.73)

135.48

23.83

(1.01)

(361.18) (538.21)

797.43

622.88

3002.37

279.85 4702.53

879.64

813.52

2852.18

757.94

1388.28 2146.22

0.27 2145.95

2.32

192.96 195.28

141.84

26.98

7.89

1117.28

2052.48 3169.76

0.28 3169.48

(61.70)

246.78 185.08

281.78

89.54

25.81

(1522.59) (1697.77) (1504.02) (1909.82)

1211.43 860.90

877.47 637.77

3014.78 2991.07

279.94 279.85 5383.62 4769.59

957.32 828.95

962.62 784.48

2439.90 2442.27

4545.34 _ 4359.84 4055.70

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.J

CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +91 22 2423 7733 W: www.cgglobal.com E: [email protected] Corporate Identity Number (GIN): L99999MH1937PLC002641

c; Smart solutions.

Strang relationships.

STANDALONE STATEMENT OF ASSETS AND LIABILITIES

Particulars

A ASSETS

1 Non-current Assets: (a) Property, plant and equipment (b) Capital work-in-progress (c) Intangible assets (d) Intangible assets under development (e) Financial assets

(i) Investments (ii) Trade receivables (iii) Loans (iv) Others

(f) Other non-current assets

Total Non-current Assets 2 Current Assets:

(a) Inventories (b) Financial assets

(i) Investments (ii) Trade receivables

(iii) Cash and cash equivalents (iv) Bank balances other than (iii) above (v) Loans

(vi) Others (c) Current tax assets (net) (d) Other current assets

Total Current Assets

3 Assets classified as held for sale and discontinued ooerations

TOT AL - ASSETS

B EQUITY AND LIABILITIES

Equity (a) Equity share capital (b) Other equity

Total Equity Liabilities

1 Non-current Liabilities: (a) Financial liabilities

(i) Borrowings (ii) Other financial liabilities

(b) Provisions (c) Deferred tax liabilities (net)

Total Non-current Liabilities 2 Current Liabilities:

(a) Financial liabilities (i) Borrowings

(ii) Trade payables

-Total outstanding dues of micro enterprises andsmall enterprises

-Total outstanding dues of creditors other than micro enterprises and small enterprises

(iii) Other financial liabilities (b) Other current liabilities (c) Provisions

Total Current Liabilities

3 Liabilities associated with group of assets classified as held for sale and discontinued operations

TOTAL - EQUITY AND LIABILITIES

As at 30.09.2020

Unaudited

807.42 1.82

31.63 20.48

14.88 -

1225.70 1158.23

1.20 3261.36

271.95

0.01 369.60 133.58

30.55 32.97

1.37 44.87

276.42 1161.32

279.85 4702.53

125.35 31.84

157.19

-

13.46 31.20 39.56 84.22

839.21

124.04

1091.41 2087.84

188.56 130.06

4461.12

-

4To2.53

f!ft in erore)

As at 31.03.2020

Audited

843.44

1.21

39.17

14.25

14.80

4.23

1225.39

1172.78

1.08

3316.35

272.69

0.01

403.06

100.94

39.68

35.64

2.79

42.35

276.23

1173.39

279.85

4769.59

125.35

588.54

713.89

352.89

204.26

33.33

21.14

611.62

894.04

120.06

1069.90

1057.30

185.81

116.97

3444.08

-

4769.59

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CG Power and Industrial Solutions Limited Registered Office:

CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgglobal.com

E: [email protected]

Corporate Identity Number (CIN): L99999MH1937PLC002641

C, Smart solutions


STANDALONE CASH FLOW STATEMENT FOR THE PERIOD ENDED 30TH SEPTEMBER. 2020

(" in crore) Particulars Six months ended

30.09.2020 30.09.2019 [A] CASH FLOW FROM OPERATING ACTIVITIES

Loss before tax from continuing operations (538.21) (1504.02) Adjustments for:

Depreciation and amortisation expense 41.60 46.37 Allowances for doubtful receivables 20.31 19.00 Bad debts written off 0.16 -

(Gain) / loss arising on financial instruments designated as FVTPL (0.08) -

Finance costs 135.48 141.84 Interest income (3.04) (7.44)

Dividend income from investment in subsidiary - (0.38)

Unrealised exchange (gain) / loss (net) 1.34 17.20

Intangible assets write off - 3.94

(Profit) / loss on sale of property, plant and equipment (net) 0.07 0.05

Exceptional items (net) 361.18 1522.59 557.02 1743.17

Operating profit before working capital changes 18.81 239.15 Adjustments for:

(Increase)/ Decrease in trade and other receivables 37.68 248.74

(Increase)/ Decrease in inventories 0.74 89.61

Increase/ (Decrease) in trade and other payables 27.60 (87.80)

Increase/ (Decrease) in provisions 10.89 2.02 76.91 252.57

Cash (used in) / from operations 95.72 491.72

Income tax paid (net of refunds) (2.52) (8.35) Net cash flow (used in)/ from continuing operating activities 93.20 483.37 Net cash flow (used in)/ from discontinued operating activities - 0.49 Net cash flow (used in)/ from continuing and discontinued operating activities [A] 93.20 483.86

[B] CASH FLOW FROM INVESTING ACTIVITIES Add: Inflows from investing activities

Sale of property, plant and equipment 0.12 0.28 Loans repaid by subsidiaries and related parties . 16.02

Interest received 4.46 6.49

Dividend income from investments in subsidiary . 0.38

4.58 23.17

Less: Outflows from investing activities Purchase of property, plant and equipment (including capital work -in- progress and capital advances) and intangible assets (7.07) (20.04) Loans given to subsidiaries and related parties - (144.71)

(7.07) (164.75)

Net cash flow (used in)/ from continuing investing activities (2.49) (141.58)

Net cash flow (used in)/ from discontinued investing activities - -Net cash flow (used in)/ from continuing and discontinued investing activities [BJ I" (2.49) (141.58)

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CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Or Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgg1obal.com E: [email protected] Corporate Identity Number (CIN): L99999MH1937PLC002641

---

Particulars

[C] CASH FLOW FROM FINANCING ACTIVITIES Add: Inflows from financing activities

Proceeds from short-term borrowings

Less: Outflows from financing activities

Repayment of long-term borrowings

Repayment of short-term borrowings Payment of lease liabilities

Finance costs paid

Net cash flow (used in)/ from continuing financing activities Net cash flow (used in) / from discontinued financing activities

Net cash flow (used in)/ from continuing and discontinued financihg activities

NET INCREASE / (DECREASE) IN CASH AND BANK BALANCES (A+B+C) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the period

Cash and cash equivalents from continulnQ operations Cash and cash equivalents from discontinued operations

Cash and cash equivalents from continuing and discontinued operations

[Cl

Smart sululiu11s Strong relationships.

r, in crore)

Six months ended 30.09.2020 30.09.2019

- 124.58 - 124.58

- (151.07) (47.38) (262.19)

(2.19) (1.66)

(8.50) (117.55'

(58.07) (532.47)

(58.07) (407.89) - -

(58.07) (407.89)

32.64 (65.61) 100.94 104.04 133.58 38.43

133.58 38.43 - -

133.58 38.43

f'\ C

lMf'v�

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CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +91 22 2423 7733 W: www.cggtobal.com E: [email protected] Corporate Identity Number (CIN): L99999MH1937PLC002641

c; Smart solulions


Notes on the standalone financial results for the quarter and six months ended September 30, 2020:

1. These unaudited standalone financial results of CG Power and Industrial Solutions Limited('the Company') have been reviewed by the Audit Committee and approved by the Board ofDirectors (the 'Board') at its meeting held on October 28, 2020. The statutory auditors haveperformed limited review of the standalone financial results of the Company as required underregulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015 as amended (the 'Listing Regulations'). The statutory auditors have disclaimed theirconclusion in respect of standalone financial results for the quarter and six months endedSeptember 30, 2020 following the reasons explained in the basis of disclaimer of conclusionin their Limited Review Report.

Further taking into consideration the explanation provided in basis of preparation and relatednotes included in these standalone financial results, the Board of the Company believe thatthese standalone financial results do not include all the impact and all disclosure of theinformation required to be included and disclosed in relation to the past transactions,including those disclosed in the audited standalone financial results for the year ended March31, 2019 and March 31, 2020, impacting standalone financial results and recoverability ofcertain identified receivables from the promoter affiliate companies (refer note 9) andconnected parties (refer note 9). Hence these standalone financial results could be materiallymisstated to that extent and could undergo change.

2. Basis of preparation of standalone financial results:(a) These standalone financial results except as stated in the notes hereafter, have been

prepared in accordance with Indian Accounting Standards ('Ind AS') notified underSection 133 of the Companies Act, 2013 read with relevant rules issued there under.

These standalone financial results have been prepared on a historical cost basis, exceptfor certain financial instruments that are measured at fair values at the end of reportingperiod as per Ind AS and certain identified transactions measured and recognised asstated in note (b) below.

(b) Certain identified financial assets and identified financial liabilities in relation totransactions and balances with certain promoter affiliate companies (as defined in note8) and connected parties (as termed in note 4), are stated at carrying value basis thetransactions accounted in the books of the Company and as explained in the auditedstandalone financial results for the year ended March 31, 2019 and March 31, 2020.

(c) Completeness of certain transactions recorded in these standalone financial results issubject to outcome of re-opening of books of accounts and recasting of financialstatements of the Company and its subsidiary companies basis the order passed by theNational Company Law Tribunal ('NCL T') on March 5, 2020. Refer note 3(b) below.Further, the Phase 2 investigation is in progress. Accordingly, the Com�y is yet toascertain the conclusion on aforesaid matters.

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CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgglobal.com E: [email protected] Corporate Identity Number (CIN): L99999MH 1937PLC002641

c; Smart solutions.


3. During the quarter and six month ended September 30, 2020 and subsequent to that, below

are the updates / key steps taken by the management of the Company, in relation toinvestigations, regulatory and recovery actions:

a) The Company and its subsidiary, CG Power Solutions Limited ('CGPSOL') receivedfollow up notices from the Serious Fraud Investigation Office ('SFIO') in relation to

ongoing investigation into the affairs of the Company and its subsidiaries. Full

cooperation is being extended to the SFIO, and such information and documents as

sought are being provided.

b) The Company has received further communication from Ministry of Corporate Affairs

('MCA') in relation to appointment of Chartered Accountant firm(s) for reopening

books of accounts and recasting of financial statements (the 'recasting exercise') ofthe Company and its subsidiary companies for 5 years ending as on March 31, 2019.

The Company also sought further clarifications from MCA on certain specific aspects

expected to arise in the recasting exercise. Further, the Company is in the process

to select the accounting firm(s) as per NCL T Order.

c) The Company has received the copy of the Forensic Auditor's Report appointed by

SEBI on September 4, 2020 and the report is shared with statutory auditors after

receiving approval from SEBI. The Company has also received follow up notices

from SEBI in relation to investigation initiated by them and the Company has

provided the required information. Full cooperation is being extended to the SEBI,

and such information and documents as sought are being provided.

d) The Company awaits further communication from Commissioner of Income Tax

(Appeals) and next hearing date from Bombay High Court, in respect of the income

tax notice of demand for INR 606.30 crore and show cause notice for the financial

year 2016-17 received by the Company.

e) The Phase II investigation initiated by the Company is currently in progress, and

report is under review of Hon'ble Justice Mr. T. S. Thakur (Retd.) who is appointed

as Head of Investigation.

f) The Company has filed a suit for recovery against identified promoter affiliate

company, former Directors connected with the promoter group and former KMPs for

recovery of sum of INR 1416.07 crore (principal INR 727.07 crore together with

damages aggregating INR 689 crore) for siphoning off funds. This suit is in addition

to suits filed by the Company towards the loss caused to Company's subsidiary,

CGPSOL for sum of INR 1709.46 crore (principal INR 1153.24 crore together with

interest aggregating INR 556.22 crore) as detailed in the March 31, 2020 standalone

financial results. The hearing date for these suits are awaited.

g) There were recovery notices been sent to certain identified parties and promoter

affiliates companies, during the previous year ended March 31, 2020, out of which

few of them were returned undelivered. There is no further up te in r I tion to this

in the quarter and six months ended September 30, 2020.

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CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +91 22 2423 7733 W: www.cgg1obal.com

E: [email protected] Corporate Identity Number (CIN): L99999MH1937PLC00264l

(:,Smart solutions.


h) The Company has filed an application with the MCA for approval of the CentralGovernment for removal of K K Mankeshwar & Co ('KKM') as Joint StatutoryAuditors. Post decision of the Board on removal, KKM has resigned with effect fromJanuary 25, 2020 and also made filing for their resignation on July 16, 2020. TheRegional Director, MCA, has disposed off the Company's application as infructuous('RD order') as KKM has already resigned as statutory auditor of the Company.Therefore, the Company has taken on record the resignation tendered by KKM interms of said RD order.

i) The Company and Avantha Holdings Limited ('AHL') had terminated the RoyaltyAgreement and entered into a new Brand Royalty Agreement on February 13, 2019effective from October 1, 2018 (New Royalty Agreement). Further, during previousyear, the Company has rescinded the New Royalty Agreement with AHL.Consequently, the New Royalty Agreement stands null and void and accordingly,the Company does not have liability towards payment of brand royalty and shall nothave any liability of any nature whatsoever towards AHL under or pursuant to theRoyalty Agreement or the New Royalty Agreement. AHL has contested therescission of New Royalty Agreement, though it has directed the Company todiscontinue the usage of Avantha brand, which the Company has discontinued.Subsequently AHL has issued notice invoking arbitration under the brand royaltyagreement. The Company has replied the arbitration invocation notice, rejectingAHL's contention in the notice on invoking arbitration clause. Subsequently AHL hasfiled an arbitration petition before Delhi High Court for appointment of the arbitrator.The Company has filed reply to AHL's arbitration petition.

j) Eight suppliers due to non-payment of their dues by the Company have approachedNCL T under Insolvency and Bankruptcy Code. The Company has received noticesin respect of such applications in NCL T. One such claim in respect of Lucy IndiaElectric Pvt Ltd ('Lucy') is being contested by the Company due to a pre-existingdispute (refer note (k) below) and for other claims the Company is in discussionswith the claimants for an amicable settlement.

k) The Company had supplied products of Lucy to customers and faced unresolvedwarranty claims with potential liability of INR 30.44 crore in respect of theseproducts. The Company was not provided counter bank guarantees against the bankguarantees provided by the Company to customers of Lucy products in breach ofthe conditions of sale by Lucy. Consequently, the Company withheld payment ofinvoices of Lucy for supply of goods and invoked the dispute resolution mechanism.However, Lucy, opted to file petition against the Company under Section 9 of theInsolvency and Bankruptcy Code, 2016 ('IBC') before NCLT, Mumbai claimingalleged unpaid debt of INR 23.50 crore (Principal of INR 19.98 crore + interest ofINR 3.52 crore). Basis the Company's internal assessment, management believesthat no additional provision is required at this stage and the case will be in favor ofthe Company. The Company is contesting this in the NCL T as a pre-existingcontractual dispute. The application was last listed on March 20, 2020. However, inview of the COVID-19 the same has been adjourned by NC and r sh date is yet

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CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cggtobal.com E: [email protected]


c; Smart solutions.


to be notified. In September, 2020 Lucy has issued a notice invoking arbitration under the Purchase Orders. The Company has replied to the arbitration notice on nomination of an arbitrator.

4. During the previous financial year, a loan from a particular lender was not rolled over, leadingto a technical default of borrowing terms and conditions with the lenders. Subsequently, allthe lenders providing credit facilities directly to the Company ('Lenders') have formed a jointlenders forum, with State Bank of India ('SBI') acting as lead bank for the process. The Boardwas in active discussion with its lenders for fund raising and resolution of the debt of theCompany. In this regard, during the quarter, all lenders of the Company have entered into anInter Creditor Agreement ('ICA') as of August 11, 2020 in accordance with framework issuedby Reserve Bank of India. This includes lender for borrowings aggregating INR 320.00 crore,availed by certain companies (termed as "connected parties" in the March, 2019 andsubsequent standalone financial results) from a financial institution on the basis ofCompany's Land and Building in Nashik and Kanjurmarg and which were extended to theCompany and Company had further extended those borrowings to one of the promoteraffiliate company and to one of the connected party. In order to facilitate the resolutionprocess with the lenders as stated in Note 5, the Company has kept legal proceedings inrespect of these borrowings, in abeyance reserving its right to initiate legal proceedings incase the resolution plan is not completed.

5. During the quarter, the Lenders and the Company received a binding offer from TubeInvestments of India Limited ('Primary Bidder'), a member of the Murugappa group forresolving the debts of the Company and to infuse capital in the Company. The binding offerwas accepted by the Board and the Lenders. In terms of the binding offer, the lenders areexpected to accept one time settlement, restructuring of funded and unfunded borrowingfacilities ('debt facilities') and primary bidder will infuse capital through a combination of equityshares and warrants ('securities') issued by the Company. Pursuant to this, a SecuritiesSubscription Agreement ('SSA') has been executed (and further amended) between theCompany and the primary bidder for infusing capital to the tune of INR 800.00 crore. Theshareholders of the Company have approved the issuance of securities in the extra-ordinarygeneral meeting held on September 2, 2020 and on September 24, 2020. Subsequent toquarter ended September 30, 2020, the Competition Commission of India has approved theproposed acquisition vide letter dated October 13, 2020. Further, the binding offer is subjectto satisfactory fulfilment of Conditions Precedents contained in the Securities Subscriptionagreement and obtaining other necessary regulatory approvals.

6. A local court in Hungary has on July 7, 2020 declared commencement of liquidationproceedings against Company's subsidiary, CG Electric Systems Hungary ('ESHU'). ESHUhas availed borrowing facilities from local banks secured by local assets and further byCGIBV and the Company provided corporate guarantees. Due to pronouncement ofbankruptcy proceedings, the said loan is considered as defaulted and CGIBV has receivedguarantee invocation letter from the bank for an amount of INR 240.40 crore (Euro 28.39million) against absolute surety provided. The borrowing is also secured by local assets atHungary. In addition, the Company has provided an independent corporate guarantee to thelocal bank. Since liquidation proceedings under the facility agreemen

¥"1

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CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgglobal.com E: [email protected] Corporate Identity Number (GIN): L99999MH1937PLC002641

c; Smart solutions


event of default, during the quarter ended June 30, 2020, the Company has made a provision of INR 240.40 crore as an exceptional item towards the bank's demand. Further the Company has provided a corporate guarantee for an amount of INR 7.87 crore (Euro 0.91 million) where performance guarantees are not invoked by customers and hence no provision is created.

7. During the quarter ended September 30, 2020, the Company has made a provision of INR47.90 crore as an exceptional item against corporate guarantee issued by Company'ssubsidiary CG International BV (CGIBV) towards borrowings of INR 239.50 crore (32.50million USO). The provision is basis the settlement consideration agreed subsequent to thequarter by the Company with the bank and is subject to RBI approval. The Company hashowever not made any provision towards corporate guarantees issued by the Companytowards credit facilities availed by certain overseas entities (including HBE Group) on theassumption that the recoverable value of assets of these operations including those whichare under bankruptcy proceedings, will be sufficient to meet all related liabilities. The amountsstated below include INR 239.39 crore in respect of guarantees invoked and INR 560.34crore in respect of where accelerated payments are asked by banks to the overseas entities.The Company has been monitoring the situation and evaluating any further assessmentrequired to be done in relation to this matter and to that extent the provision amount may varysubsequent to period end. The amount pertains to guarantees given and outstandingtowards:

• HBE Group aggregating to INR 638.76 crore (EURO 74.03 million)• entities other than HBE Group and ESHU aggregating to INR 267.14 crore (EURO

30.96 million)

8. The Avantha group, promoted by Mr. Gautam Thapar, is classified as Promoter and PromoterGroup of the Company ("Promoters") and holds less than 0.01 % equity shareholding. OnSeptember 4, 2020, SEBI has provided necessary exemption to the Company to reclassifythe status of Avantha Group from "Promoters" to "Public" ('reclassification') after takingnecessary approval from shareholders. Subsequently, the shareholders approved the saidreclassification of shareholding from promoter to public in the annual general meeting heldon October 19, 2020. The Company is in the process of making application to stockexchanges for reclassification. Pending the stock exchange approval, the Avantha Group isstill classified as Promoters and their associated group companies as 'promoter affiliatecompanies'.

9. The Company has certain non-current receivables from various subsidiary, promoter affiliatecompanies (as defined in Note 8) and connected parties as at quarter end. The Companyhas initiated recovery process in consultation with legal counsels including filing of recoverysuits (refer note 3(f)) and will be taking further actions as may be legally advised. Further, nointerest has been accrued on all such balances from April 1, 2019. Following are thereceivable and payable balances (net of provision) from / to various subsidi�, promoteraffiliate companies and connected parties:

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CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worti, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgglobal.com E: [email protected] Corporate Identity Number (CIN): L99999MH1937PLC002641

As at


� in crore)Asat

Name of the entity Relationship 30.09.2020 31.03.2020

A) Advance I Loan given

CG Power Solutions Limited Subsidiary 1218.87 1218.87 Avantha Holdings Limited Promoter affiliate company 680.47 680.47 Avantha Realty Limited Promoter affiliate company 10.66 10.66 Solaris Industrial Chemicals Limited Promoter affiliate company 97.00 97.00 Acton Global Private Limited Connected party 175.00 175.00 Blue Garden Estate Private Limited Connected party 176.11 176.11 Total 2358.11 2358.11

B) Loan payable

Blue Garden Estate Private Limited Connected party 320.00 320.00 Total 320.00 320.00

10. Exceptional Items includes the following:(' In crore,)

Quarter ended Six months ended Year ended

Particulars 30.09.2020 30.06.2020 30.09.2019 30.09.2020 30.09.2019 31.03.2020

Provision against doubtful advances . - (266.40] - (266.40) (334.98)

Impairment of investments in subsidiaries . - (884,12) - (884,12) (884.12)

Provision against litigation (for trade receivable and claims) . - . . . (22.48

Impairment of loan given to overseas subsidiaries - (315.75) - (315.75) (315.75)

Provision for advances, trade receivables and trade

payable (net) - overseas subsidiaries - . (51.51) - (51.51) (92.31)

Short fall of provident fund liability - - - . . (0.78)

Post retirement medical benefit provision reversal - -

10.83 - . . - -

(Provision)/ Reversal for interest towards delay in completion of

land sale and expected restructuring cost (31.47) (31.14) - (62.61) - (21.94)

Professional and Consultancy fees due to ongoing

investigations and debt resolution plan (9.27) (1.00) (4.81) (10.27) (4.81) (36.24)

Provision towards corporate guarantee for overseas entity (47.90 (240.40) - (288.30) . -

Total (88.64) (272.54) (1522.59' (361.18) (1522.59) (1697.TT)

Note: Amount in the nature of provision / expenses are shown in brackets in above table.

Below are further details on exceptional items:

a. During the quarter and six months period ended September 30, 2020, the company hasprovided an amount INR 31.47 crore and INR 62.61 crore respectively towards interestpayable on delay in consummation of Kanjurmarg land sale pending fulfilment of conditionprecedents linked as per the sale agreement;

b. During the quarter and six months period ended September 30, 2020, the Company hasincurred professional and consultancy charges of INR 9.27 crore and INR 10.27 crorerespectively towards the debt resolution process initiatives and ongoing investigations in relation to matters identified and disclosed in the financial results for the year ended March31, 2019 and March 31, 2020;

11. A customer of CG Power Systems, Canada Inc. (CG Canada), a wholly owned step-downsubsidiary of the Company in relation to non-performance of a contract(for supply of

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CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgg1obal.com

E: [email protected] Corporate Identity Number (CIN): L99999MH1937PLC002641


transformer by CG Canada has claimed in the court in Ontario, damages of CAD 11.85 million

from CG Canada, its parent CGIBV and the Company which is the ultimate parent company.

The claim on CGIBV and the Company, though neither of them is party to the contract with

the customer, is based on Canadian law which provides for liability on shareholders of a

corporation, if it is dissolved and the proceeds are distributed to its shareholders without

properly addressing its liabilities. The assets of CG Canada were divested in 2015 and

consequently, it will not have any amount available for distribution to shareholders after

meeting its liabilities in view of which provision has not been considered for this claim.

12. During the quarter ended September 30, 2020, the Company has provided for an amount of

INR 9.64 crore as other cost towards amount debited by a bank towards a bank guarantee

invoked in 2011 by the customer operating from restricted country (Syria) and due to which

remittance is not possible. Since the Company is under Resolution under RBI circular, the

bank has now debited the amount to honor the liability in future.

13. During the six month ended September 30, 2020, certain amounts have been appropriated

by banks / paid to banks by the Company, aggregating to INR 32.55 crore and INR 20.25

crore respectively, against outstanding dues of the Company towards these banks.

Considering the ongoing resolution process, the Company has asked the bank to refund

these amounts post settlement of debt under the said resolution process.

14. The Company had entered into a definitive agreement for sale of its remaining portion of land

at Kanjurmarg to Evie Real Estate Private Limited (EVIE) and the existing Kanjurmarg factory

was closed for completion of sale of land. The consummation of sale of land is linked to

certain conditions precedent which are required to be fulfilled by the Company. The Company

is still in the process of fulfilling those conditions including various 'No Objection Certificates'

from different municipal / government departments.

15. The Company has incurred a net loss before exceptional item of INR 177.03 crore during the

six months ended September 30, 2020 and also incurred losses during the previous year

ended March 31, 2020. The Company has reclassified non-current borrowings to current

borrowing based on expected settlement of those liabilities and as at September 30, 2020,

the Company's current liability exceeds its current assets by INR 3299.80 crore. As stated in

Note 5, during the quarter, the Company along with the lenders have accepted a binding offer

from the successful bidder in respect of infusion of equity, one-time settlement and

restructuring of debt facilities.

Given the financial stress from past events unfolding and possible impact on opening

balances carried forward from March 31, 2020 explained elsewhere hereinafter, the going

concern basis of preparation of these standalone financial results could be affected as at

September 30, 2020.

However, the Company believes following mitigating factors and business updates available

till date support the going concern assumption for preparation of these standalone financial

results, as at quarter ended September 30, 2020:

- all lenders of the Company have entered into an inter-creditor agreement s of August 11,

2020


CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 0 30, India T: +91 22 2423 7700 F: +9122 2423 7733 W: www.cgglobal.com E: [email protected]


c; Smart solutions.


- As stated in note 5, the Board and lenders have approved binding offer given by successful

bidder wherein lenders are expected to accept one time settlement, restructuring of debtfacilities and and the successful bidder is expected to infuse capital of INR 800.00 crore

after receiving all statutory and regulatory approvals by the Company. The net current

liabilities may consequently decrease on conclusion resolution plan and implementation

of binding offer as stated above.

- The Company has an unexecuted business order book of over INR 2563.00 crore as of

date

16. The Company is yet to submit C Forms to tax authorities for prior years in relation to sales

tax. The Company is continuously reviewing the available documentation and assessment of

recoverability of such balances through collection and submission of such C Forms. During

the quarter ended Jun 30, 2020, the Company provided INR 29.61 crore towards principal

liability and during the quarter ended September 30, 2020, the Company has reversed

provision of INR 8.80 crore basis the rectification order received from sales tax dept. While

the Company has received demands for interest which are under appeal, however based on

past experience, considering that the interest payable on such liability is determined only

after outcome of appeals and concluding final submissions of C Form, the Company has

accordingly not provided towards interest demand on the principal liability provision. The

management best estimate for such interest demand is INR 21.35 crore.

17. The Company has lease hold land located at Annie Besant Road, Worli, Mumbai ("Plot")under the lease agreement dated March 03, 1925, for a period of ~93 years which was

assigned to the Company vide an Assignment Agreement and lease deed dated December

30, 1954 and June 10, 1963 respectively. The lease of the Plot expired on May 29, 2018 prior

to which the Company submitted application for renewal of lease with the lessor, Municipal

Corporation of Greater Mumbai (MCGM). Post the application for renewal of lease, the

Company has received a demand towards alleged short recovery by MCGM in 1997-98 of

INR 8.58 crore together with interest thereon for INR 19.24 crore. Since the Company had

not received any such claim in 1997-98 or any time thereafter, it has responded to the

demand giving details of payment of all past demands of MCGM. The Company has not

received a response from MCGM. Further, MCGM has not responded the Company's

application for renewal of lease though the Company continues to pay property taxes and

other levies to MCGM on lease after the expiry of the lease. The net book value of tangible

assets as at September 30, 2020 in relation to this plot is INR 190.97 crore.

18. The Company has not determined whether to avail the option permitted under section

115BAA of the Income Tax Act, 1961. In view of this, the Company has currently made

provision for tax based on the normal tax rates (i.e. on the basis of rate applicable to the

Company immediately before the amendment).

19. The Company has carried forward tax losses of INR 2479.90 crore as per tax returns filed by

the Company, which will be further subject to change due to recasting exercise as stated in

Note 3(b) on which the Company has not recognised deferred tax assets. Unrecognised

deferred tax assets are reassessed at each reporting date and are recognised the extent


CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai 400 030, India T: +91 22 2423 7700 F: +91 22 2423 7733 W: www.cgglobal.com

E: [email protected]

Corporate Identity Number (CIN): L99999MH1937PLC002641 Smart solutions.


that it has become probable that future taxable profits will allow the deferred tax asset to be

recovered.

20. As a result of the transactions disclosed by the Company in its audited standalone financial

results for the year ended March 31, 2019 and March 31, 2020 ('certain transactions'), the

Company may not have complied with the provisions of Section 185, Section 186 and certain

applicable sections of the Companies Act, 2013. The Company also believes that there may

be potential non-compliances under SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015; Income Tax Act, 1961 and other statutes and regulations as applicable

to the Company. The Company is still in the process of investigation in respect of certain

transactions (Phase 2 investigation), besides the additional investigation initiated by

regulators which is ongoing and evaluating the implications of these potential non

compliances and the potential remedies available.

21. Due to unprecedented torrential rains, the Company's facilities located at Mandideep,

Madhya Pradesh were temporarily affected in August, 2020 due to water logging.

Subsequently, the plant operations started within a week. The facilities are covered through

insurance policy and preliminary survey is conducted by the insurance company. Further

repairs of the affected machineries as required are being carried out. Based on current

assessment, there is no material impact due to the water logging.

22. Globally including in India, the outbreak of COVID-19 emerged as a pandemic. This outbreak

has caused significant disturbances and slowdown of economic activity throughout the world.

The Company's operations in India were impacted from March, 2020, due to suspension of

production across all plants and closure of offices following nationwide lockdown announced

by the Government of India in view of COVID-19. The lockdown affected our partners and

customers too, resulting in diminished sales, ordering and manufacturing activities.

Subsequent to easing of lockdown and receipt of requisite approvals, the Company had

commenced limited operations at all its plants from April 29, 2020. The national lock down

continued until early June, when it was followed by further state level lock downs. The

company has now ramped up the production, sales and allied activities.

23. Previous periods figures have been regrouped/ reclassified, where necessary to conform to

the classification of the current period.

Place: Mumbai

Date: October 28, 2020

For CG Power and Ind trial Solutions Limited

By O der of the Board

S hir Mathur

Whole Time Executive Director

DIN: 01705609

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12th Floor, The Ruby29 Senapati Bapat MargDadar (West)Mumbai - 400 028, India

Tel: +91 22 6819 8000


S R B C & CO LLP, a Limited Liability Partnership with LLP Identity No. AAB-4318Regd. Of ce : 22, Camac Street, Block ‘B’, 3rd Floor, Kolkata-700 016

Independent Auditor’s Review Report on the Quarterly and Year to Date Unaudited ConsolidatedFinancial Results of CG Power and Industrial Solutions Limited Pursuant to the Regulation 33 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

Review Report toThe Board of DirectorsCG Power and Industrial Solutions Limited

1. We were engaged to review the accompanying statement of unaudited consolidated financialresults of CG Power and Industrial Solutions Limited (the ‘Holding Company’) and its subsidiaries(the Holding Company and its subsidiaries together referred to as “the Group”), for the quarterended September 30, 2020 and year to date from April 01, 2020 to September 30, 2020 (‘theUnaudited Consolidated Financial Results’) attached herewith, being submitted by the HoldingCompany pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).

2. The Unaudited Consolidated Financial Results is the responsibility of the Holding Company’sManagement and is approved by the Holding Company’s Board of Directors. As explained in theBasis of preparation, these Unaudited Consolidated Financial Results have not been prepared inaccordance with the recognition and measurement principles laid down in Indian AccountingStandard 34, (Ind AS 34) “Interim Financial Reporting” prescribed under Section 133 of theCompanies Act, 2013, as amended, read with relevant rules issued thereunder and otheraccounting principles generally accepted in India. Our responsibility is to express a conclusion onthese Unaudited Consolidated Financial Results based on our review. Because of the mattersdescribed in paragraph 5 below, we were not able to obtain sufficient appropriate audit evidenceto provide a basis for conclusion on these Unaudited Consolidated Financial Results and hence wedo not express a conclusion on these Unaudited Consolidated Financial Results.

3. We conducted our review of the Unaudited Consolidated Financial Results in accordance with theStandard on Review Engagements (SRE) 2410, “Review of Interim Financial Information Performedby the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India.This standard requires that we plan and perform the review to obtain moderate assurance as towhether the Unaudited Consolidated Financial Results is free of material misstatement. A reviewof interim financial information consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other review procedures. A review issubstantially less in scope than an audit conducted in accordance with Standards on Auditing andconsequently does not enable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express an audit opinion.

4. The Unaudited Consolidated Financial Results includes the results of the subsidiaries as listed downin Annexure I.

5. Basis for Disclaimer of Conclusion

As explained in the note 2 and note 3 of the Unaudited Consolidated Financial Results, the NationalCompany Law Tribunal (NCLT) has passed an order allowing the Ministry of Corporate Affairs (MCA)to reopen and recast the books of accounts and the financial statements of the Company and itssubsidiaries (‘Proposed Revision’) under Section 130 of the Companies Act 2013. As stated in note1 and note 2, the Board of Directors of the Holding Company, taking into consideration the basisof preparation and the significance of matters described in notes to the Unaudited ConsolidatedFinancial Results in relation to the past transactions, believes that the accompanying UnauditedConsolidated Financial Results have been prepared in accordance with the recognition and


CG Power and Industrial Solutions LimitedPage 2 of 8

measurement principles laid down in Indian Accounting Standard 34, (Ind AS 34) “Interim FinancialReporting” except for matters detailed in notes to the Unaudited Consolidated Financial Results;believes that the accompanying Unaudited consolidated financial results may not disclose all theeffects and all the information required to be disclosed in terms of the Listing Regulations, includingthe manner in which it is to be disclosed, and that the accompanying Unaudited ConsolidatedFinancial Results may contain material misstatements.

We are unable to determine the consequential impact of the aforesaid Proposed Revision and theimpact of matters stated in our audit report for the year ended March 31, 2020 on the openingbalances and the impact of certain specific transactions / matters and disclosures on theseUnaudited Consolidated Financial Results. Such specific transactions / matters include:

i. We draw attention to note 9 of the Unaudited Consolidated Financial Results. There are certainoutstanding identified receivables and identified liabilities as at March 31, 2020 aggregatingRs. 2,948.53 crores and Rs. 326.30 crores respectively, which as explained to us, were duesfrom / dues to promoter affiliate companies, connected parties, and a subsidiary, and thetransactions that resulted in such identified receivables and identified liabilities were approvedby erstwhile Certain Identified Personnel (CIP).

As stated in note 3(f) of the Unaudited Consolidated Financial Results, the Holding Companyhas filed a suit for recovery against identified promoter affiliate company, former Directorsconnected with the promoter group and former KMPs for recovery of Rs. 3,125.53 (includingamount towards interest of Rs. 556.22 crores and damages Rs. 689 crores) as at September30, 2020, respectively.

As of the date of this report, the Board of Directors had initiated an investigation into theaforesaid matters; are still awaiting investigations to be concluded and; yet to identify a basisto conclude whether the identified receivables are recoverable and identified liabilities arepayable. Accordingly, we are unable to quantify the adjustments to the Unaudited ConsolidatedFinancial Results in relation to such outstanding identified receivables and identified liabilities.

ii. We draw attention to note 2(e), note 10(c) and note 10(d) of the Unaudited ConsolidatedFinancial Results, which describes that on July 7, 2020 Local Court in Hungary has declared CGElectric Systems Hungary Zrt. (‘ESHU’) as bankrupt, accordingly the Group has deconsolidatedthe operations of ESHU as on June 30, 2020.

Consequent to the above, the Group had recorded a total gain of Rs. Nil and Rs. 215.57 croresassociated with the deconsolidation of the ESHU operations during the quarter and period endedSeptember 30, 2020, respectively. Further, The Group has made a provision of Rs. Nil and Rs.240.40 crores during the quarter and period ended September 30, 2020, towards the bankborrowings availed by the ESHU against corporate guarantee provided by the Holding Company.The management of Holding Company has accounted the impact of deconsolidation of ESHU onthe basis of unaudited/ unreviewed financial information of ESHU.

In the absence of an audited / reviewed financial information of ESHU we are unable todetermine completeness of financial information included in and potential impact on theaccompanying Unaudited Consolidated Financial Results.

iii. We draw attention to note 2(e) and 7 of the Unaudited Consolidated Financial Results, whichdescribes that the Group has not made any provision towards the corporate guaranteesprovided to certain overseas entities amounting to Rs. 688.39 crores (including Rs. 619.23crores against which guarantee invocation / demand letters are received by the Group). Further,a bank has debited Rs. 4.21 crores towards the outstanding dues of the Group.



The management of the Holding Company is following up with the bank to seek reversal of suchdebits made by bank and accordingly no provision has been created during the quarter andperiod ended September 30, 2020.

Pending outcome of bankruptcy / liquidation proceedings of such oversees entities, we areunable to obtain sufficient appropriate audit evidence in respect of potential impact of anyunforeseen liabilities post liquidation, outcome of such invocation/demand letter and obligationtowards corporate guarantees extended to these subsidiaries and its consequential impact onthe Unaudited Consolidated Financial Results.

iv. We draw your attention to note 17 of the Unaudited Consolidated Financial Results, whichdescribes that the Holding Company has made a provision amounting to Rs. 20.81 crorestowards the sales tax liability on outstanding ‘C’ Form pending to be submitted to the sales taxauthorities, as at September 30, 2020. It is further stated that the Holding Company has notprovided for the interest liability aggregating to Rs. 21.35 crores, basis management estimatethat there will be no possible cash outflow in this regard. However, management has receiveddemand notices in relation to such interest liabilities.

In the light of inadequate basis for not providing the interest liability towards outstanding ‘C’forms pending to be submitted, we are unable to obtain sufficient basis to comment oncompleteness of related provision and consequential impact on the Unaudited ConsolidatedFinancial Results.

v. We draw attention to note 6 and 10(e) of the Unaudited Consolidated Financial Results, whichdescribes that the Group has executed a Share purchase agreement for divestment of the entireshareholding in its subsidiary, CG Services Systems France SAS, (SEFR), Consequently, theGroup has accounted total gain of Rs. 3.08 crores associated with deconsolidation during thequarter and period ended September 30, 2020. The management of Holding Company hasaccounted the impact of deconsolidation of SEFR on the basis of unreviewed financialinformation of SEFR.

In the absence of an audited / reviewed financial information of SEFR we are unable todetermine completeness of financial information included in and potential impact on theaccompanying Unaudited Consolidated Financial Results.

vi. We draw attention to note 21 to the Unaudited Consolidated Financial Results which describesthat the Board of Directors have instructed the management to undertake a detailedinvestigation in relation to the matters of possible non-compliance with various provisions ofthe Companies Act, 2013, the Income Tax 1961, the Foreign Exchange Management Act 1999,SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended),Prevention of Money Laundering Act and other regulations, as applicable to the Group(Applicable Laws). The Holding Company is in process of investigation and evaluation ofimplication of potential non compliances of Applicable Laws.

Further, as stated in note 3(a), 3(b), 3(c), 3(d) and note 3(e) of the Unaudited ConsolidatedFinancial Results, there are investigations and enquiries been conducted, for reasons explainedin the notes to the Unaudited Consolidated Financial Results, by Securities and Exchange Boardof India, Serious Fraud Investigation Office and Enforcement Directorate. Further, Departmentof Income Tax has also issued notices and is seeking explanations by the Holding Company. TheHolding Company is engaging and providing details and responses to all such investigations,enquiries and demands, as raised on the Holding Company.



Pending outcome of the investigation initiated by the Holding Company and conducted on theGroup by regulators and Holding Company’s management assessment thereon, we are unableto determine the potential impact of non - compliances with Applicable Laws and determine anyfurther adjustment that may be necessary to these Unaudited Consolidated Financial Results.

vii. We draw attention to note 4 and note 9 of the Unaudited Consolidated Financial Results. TheGroup has entered into various transactions with certain identified connected parties whereinsome of the Holding company’s employees owned beneficial ownership in such connectedparties and further certain senior management personnel of the Holding Company weredirectors of these connected parties. Pending ongoing investigation, the Holding Company hasnot yet completed its assessment to determine the nature of its relationship with theseconnected parties and whether the Group holds control over these connected parties, hence,the Holding Company has not concluded whether these parties should be consolidated atSeptember 30, 2020.

We were unable to obtain sufficient appropriate audit evidence with respect of completeness ofthe list of related parties, disclosure of related party transactions and potential impact onUnaudited Consolidated Financial Results as disclosed in note 9 of these Unaudited ConsolidatedFinancial Results.

viii. We draw your attention to note 3(d), 3(i), 3(j), 3(k), 3(l), 11 and note 18 of the UnauditedConsolidated Financial Results which describes that identified litigations and contingencies arepending to be evaluated by the management of the Holding Company and the management hasnot ascertained the legal position of the Group, the possible cash outflow and consequentialimpact on these Unaudited Consolidated Financial Results.

Pending management evaluation of legal positions and possible cash outflows, we are unable toobtain sufficient appropriate evidence with respect to completeness of litigation andcontingencies and consequential impact on these Unaudited Consolidated Financial Results.

ix. We draw your attention to note 3(c) of the Unaudited Consolidated Financial Results wherein itis stated that the Holding Company has received a copy of forensic report on September 04,2020 pursuant to an investigation by a forensic auditor appointed by BSE as mandated by SEBI.As stated in note 3(c), the Company is providing information to SEBI in respect of theinvestigation.

Pending resolution of matters stated in such forensic report, we are unable to comment on anypossible implications arising therefrom.

x. We draw attention to the Basis of Preparation of these Unaudited Consolidated FinancialResults, which indicate that the accompanying Unaudited Consolidated Financial Results includeunaudited financial results and other unaudited financial information in respect of 10subsidiaries, part of continued operations of the Group, whose interim financial results andother financial information reflect total assets of Rs. 2,405.66 as at September 30, 2020, totalrevenues of Rs. 5.87 crores and Rs. 53.89 crores, total net loss after tax Rs. 6.05 crores andRs. 60.69 crores, total comprehensive loss (net) of Rs. 6.05 crores and Rs. 60.69 crores forthe quarter and period ended September 30, 2020 respectively and net cash outflows of Rs.9.73 crores for the period from April 01, 2020 to September 30, 2020, in respect of 3subsidiaries, part of discontinued operations of the Group, whose interim financial results andother financial information reflect total assets of Rs. 5.69 as at September 30, 2020, totalrevenues of Rs. Nil and Rs. Nil, total net profit after tax Rs. 0.01 crore and Rs. 0.01 crore, totalcomprehensive profit (net) of Rs. 0.01 crore and Rs. 0.01 crore for the quarter and periodended September 30, 2020 respectively and net cash inflows of Rs. 0.21 crore for the periodfrom April 01, 2020 to September 30, 2020, as considered in the Unaudited Consolidated



Financial Results based on their interim financial results and other financial information whichhave not been audited by their auditors. These unaudited interim financial results and otherfinancial information are considered by the management of Holding Company on the basisof financial information available with them (either approved or not approved by individualsubsidiaries) for preparation of these Unaudited Consolidated Financial Results includingelimination of related party transactions and conversion of financial statements into accountingprinciples generally accepted in India.

Further as state in note 7 of Unaudited Consolidated Financial Results, during the previous yearended March 31, 2020, the Group has deconsolidated certain subsidiaries based on theassumed date on January 01, 2020, pending completion of bankruptcy procedures.

Our report, in so far as it relates to amounts and disclosures included in respect of thesesubsidiaries is based solely on such interim financial results and other financial information asavailable and considered by the management. We are unable to determine the impact on totalrevenues, assets and loss for the year had these entities been subjected to limited review.

xi. We draw attention to note 2(d) of these Unaudited Consolidated Financial Results, whichindicate non-compliance with the regulation 33(3)(h) of the Listing Regulations, which requiresthe Group to ensure limited review of at least 80% of its operations with effect from April 01,2019. Further elimination of intercompany transactions for preparation of these UnauditedConsolidated Financial Results are made based on the unaudited interim financial resultsavailable with the Holding Company.

Pending review of identified subsidiaries and subject to the possible adjustments on account ofongoing investigations, we are unable to determine the potential impact of non-complianceswith respect of regulation 33(3)(h) and determine any further adjustment that may benecessary to these Unaudited Consolidated Financial Results.

xii. Going Concern Assessment

We draw attention to note 16 of the Unaudited Consolidated Financial Results which indicatethat (a) the Group has incurred net losses in the previous years and during the six months periodended September 30, 2020 and has negative net worth as at period ended September 30,2020; (b) the Group's current liabilities exceeded its current assets as at September 30, 2020by Rs. 4,706.41 crores; (c) as given in note 5 of the Unaudited Consolidated Financial Results,the Holding Company and lenders have approved binding offer made by primary bidder andentered into a Securities Subscription Agreement for infusing of capital amounting to Rs. 800crores, which is subject to pending approvals, further basis expected settlement as per theresolution plan the Company has classified borrowings balances as current liabilities. However,considering that as per the terms of settlement and share subscription agreement, the investorwill be taking over operations on issuance of shares and warrants, the current management isnot in a position to provide cash flow assessment for the period of next 12 months.

Pending the outcome of the matters described in the paragraph (i) to (xi) above and the mattersdisclosed in paragraph xii(a) to xii(c) above, and possible impact thereof and taking intoconsideration the inability of the existing management of the Holding Company to provide thecash flow statement for a period of next 12 months, we are unable to obtain sufficientappropriate evidence to Group’s ability continue as Going Concern.



6. Disclaimer of Conclusion

Because of the significance of the matters described in paragraph 5 above, taking into considerationthe ongoing management investigation into various matters, pending assessment of legalcompliances by the Holding Company; ongoing regulatory reviews / actions and counter claimsreceived by the Holding Company; possible impact where-of has not been quantified by themanagement; and certain provisions accounted by the Holding Company during the quarter and sixmonths ended September 30, 2020; we have not been able to obtain sufficient appropriateevidence to provide a basis for our conclusion as to whether the accompanying UnauditedConsolidated Financial Results:

i. are prepared in accordance with the recognition and measurement principles laid down in IndianAccounting Standard 34, (Ind AS 34) "Interim Financial Reporting" specified under Section 133of the Companies Act, 2013 and;

ii. disclose the information required to be disclosed in terms of the Listing Regulations includingthe manner in which it is to be disclosed or that it contains material misstatements.

Other Matters

7. We did not review the unaudited financial results and other financial information, in respect of 5subsidiaries, part of continued operations of the Group, whose interim financial results and otherfinancial information reflect total assets of Rs. 1,000.60 crores as at September 30, 2020, totalrevenues of Rs. 102.46 crores and Rs. 186.12 crores, total net profit after tax Rs. 3.79 crores andRs. 4.44 crores, total comprehensive profit (net) of Rs. 3.79 crores and Rs. 4.44 crores for thequarter and period ended September 30, 2020, respectively and net cash inflows of Rs. 5.65 croresfor the period from April 01, 2020 to September 30, 2020. These financial results and otherfinancial information have been reviewed by other auditors, which financial results, other financialinformation and auditor's reports have been furnished to us by the management. Our report on theUnaudited Consolidated Financial Results, in so far as it relates to the amounts and disclosuresincluded in respect of these subsidiaries is based solely on the reports of such other auditors.

Certain of these subsidiaries are located outside India whose financial results and other financialinformation have been prepared in accordance with accounting principles generally accepted intheir respective countries and which have been reviewed by other auditors under generally acceptedauditing standards applicable in their respective countries. The Holding Company's managementhas converted the financial results / statements of such subsidiaries located outside India fromaccounting principles generally accepted in their respective countries to accounting principlesgenerally accepted in India. These conversion adjustments are made by the Holding Company'smanagement. Our report in so far as it relates to the balances and affairs of such subsidiarieslocated outside India is based on the report of other auditors and read with paragraph 5 above andthe conversion adjustments prepared by the management of the Holding Company.

8. In case of one subsidiary not reviewed by us, the other auditor who reviewed the subsidiary hasreported a disclaimer of conclusion with respect to the financial results and other financialinformation of the subsidiary whose financial results and other financial information reflect totalassets of Rs. 405.41 crores as at September 30, 2020, total revenues of Rs. Nil and Rs. Nil, totalnet profit after tax Rs. 0.04 crore and total net loss after tax Rs. 1. crore, total comprehensive profit(net) of Rs. 0.04 crore and total comprehensive loss (net) Rs. 1. crore for the quarter and periodended September 30, 2020 and net cash outflows of Rs. 0.13 crore for the period from April 01,2020 to September 30, 2020, as considered in these Unaudited Consolidated Financial Results.



9. In relation to certain identified transactions before March 31, 2019 and balances as at March 31,2019, we had issued a letter under section 143(12) of the Companies Act 2013 to the HoldingCompany seeking investigation and outcome. Based on the interim response received from theBoard of Directors of the Holding Company, we filed our preliminary response to the CentralGovernment reporting the suspected fraudulent transactions and balances. Managementinvestigation are not yet concluded.

10. The comparative Ind AS financial information for the quarter ended June 30, 2020, quarter andperiod ended September 30, 2019 and for the year ended March 31, 2020 are included in theseUnaudited Consolidated Financial Results, on which we have issued a disclaimer of conclusion datedSeptember 08, 2020, January 28, 2020 and disclaimer of opinion dated June 27, 2020,respectively.

For S R B C & CO LLPChartered AccountantsICAI Firm registration number: 324982E/E300003

per Shyamsundar PachisiaPartnerMembership No.: 49237

UDIN: 20049237AAAACP2061

Place: MumbaiDate: October 28, 2020

Digitally signed bySHYAMSUNDAR R PACHISIADN: cn=SHYAMSUNDAR RPACHISIA, c=IN, o=Personal,[email protected]: 2020.10.28 20:23:26 +05'30'

SHYAMSUNDARR PACHISIA



Annexure 1 – List of entities included in the Unaudited Consolidated Financial Results

Sr. No. Name of E

Documents

CG Power and Industrial Solutions Limited · 2020. 10. 28. · CG Power and Industrial Solutions Limited Registered Office: CG House, 6th Floor, Dr Annie Besant Road, Worli, Mumbai